Eliza Wong
Executive Summary
China Vanke Group (万科集团), one of China’s largest property developers, has initiated a significant organizational restructuring that marks a strategic shift toward centralized control and operational efficiency.
- Vanke eliminates regional company layer, implementing direct headquarters management of 16 city companies
- Restructuring follows increased oversight from state shareholder Shenzhen Metro Group (深圳市地铁集团有限公司)
- Move aims to accelerate debt resolution and improve risk management amid ongoing property sector crisis
- Company faces substantial liquidity challenges with over 360 billion yuan in maturing debt
- Industry-wide trend sees major developers streamlining operations to survive market downturn
Major Organizational Overhaul Signals Strategic Shift
China Vanke Group (000002.SZ/02202.HK) has officially announced a comprehensive organizational restructuring that fundamentally changes its management approach. The September 17 announcement confirms market speculation about impending changes to the developer’s operational structure.
The new framework establishes three distinct organizational types: Group Headquarters, Regional Companies, and Business Units. This replaces the “5+2+2” structure implemented in October 2023, which featured five regional companies, two general companies, and two directly managed companies.
This restructuring represents the most significant organizational and personnel changes since state-owned Shenzhen Metro Group (深铁集团) assumed management control in January. The move toward headquarters direct management reflects both internal needs and external market pressures.
New Management Structure Details
Under the new headquarters direct management system, Vanke has established 16 city companies that report directly to headquarters without intermediate regional layers. These include Beijing Company, Guangfo Company, Shenzhen Company, and others based on business volume, development prospects, and project value considerations.
The elimination of regional management levels aims to reduce bureaucratic layers and accelerate decision-making processes. This headquarters direct management approach is designed to create more responsive operational control during challenging market conditions.
Strengthening Headquarters Control and Accelerating Centralization
Vanke’s organizational changes specifically focus on strengthening headquarters management functions and accelerating power recentralization. This strategic shift addresses several critical challenges facing the company and the broader property sector.
A leading securities firm property analyst noted that the restructuring serves multiple purposes: “Vanke’s organizational adjustments aim to further strengthen headquarters management functions and accelerate power recentralization. This move can improve internal decision-making efficiency, enhance risk prevention capabilities, speed up Vanke’s debt resolution process, and achieve unified coordination across the organization.”
The headquarters direct management model represents a significant departure from Vanke’s previous approach during the property market boom period when the company embraced decentralization and partner mechanisms to drive rapid growth.
Management Appointments Reflect New Direction
The restructuring includes significant management changes that reinforce the headquarters direct management approach. Bu Lingqiu (卜令秋) from the “Shenzhen Metro system” has been appointed as Group Financial Director, bringing experience from Shenzhen Tianjian (Group) Co., Ltd. (深圳市天健（集团）股份有限公司), Shenzhen Tianjian Asphalt Road Engineering Co., Ltd. (深圳市天健沥青道路工程有限公司), and Shenzhen Municipal Engineering Corporation (深圳市市政工程总公司).
Meanwhile, veteran executive Han Huihua (韩慧华), who joined Vanke in 2008, continues as Executive Vice President and Financial Officer. Other regional leaders have been reassigned to functional departments, with former East China Regional Management Department head Wu Di (吴镝) promoted to Chief Marketing Officer and former Southwest Regional Management Department head Li Wei (李嵬) becoming General Manager of the Group Investment Development Center.
Industry-Wide Trend Toward Streamlined Operations
Vanke’s move toward headquarters direct management reflects a broader industry pattern as Chinese property developers adapt to sustained market challenges. Among 65 enterprises monitored by real estate information service provider CRIC (克而瑞), 14 major developers have conducted 19 organizational adjustments this year alone.
Notably, seven of the top ten developers have implemented structural changes. CRIC Group Chairman Ding Zuyu (丁祖昱) analyzes that these adjustments share a common direction: “Their adjustment directions all focus on ‘eliminating intermediate levels, strengthening headquarters control, and enhancing city-level execution capabilities.'”
In the short term, developer profit scales and profitability levels will continue facing pressure. Leading developers are adopting flatter organizational structures through headquarters direct management and similar approaches to navigate the industry’s deep adjustment phase.
Implementation Challenges and Considerations
While organizational streamlining offers potential benefits, the transition to headquarters direct management presents implementation challenges. Ding Zuyu notes that management adjustments and changes often face difficulties including team member连带变动 (连带变动, associated changes) and talent loss.
The organizational adjustment transition period also brings new challenges, particularly regarding coordination and connection between headquarters and regional personnel. Companies must balance these factors after making structural changes. Southern Daily (南方日报) reported in August that Vanke’s adjustments follow the core principle of “strengthening control while stimulating vitality,” aiming to achieve critical balance between organizational control and market vitality.
Ongoing Operational Pressures and Liquidity Challenges
Despite organizational changes, Vanke continues facing significant operational pressure and severe liquidity challenges. The company’s financial situation underscores the urgency behind the headquarters direct management restructuring.
Concurrent with the organizational announcement, Vanke disclosed on September 16 that Shenzhen Metro Group would provide up to 2.064 billion yuan in loans to help repay Vanke’s public bond principal and interest. This marks the tenth capital injection from Shenzhen Metro this year, totaling approximately 26 billion yuan in support.
Vanke faces substantial debt maturities throughout 2025, with over 36 billion yuan in domestic and foreign public bonds due or exercisable. While the company has repaid 24.39 billion yuan in public debt on schedule, liquidity difficulties persist.
Financial Performance and Market Challenges
Vanke’s 2025 interim report reveals the depth of current challenges. The company reported a net loss of approximately 10.865 billion yuan in the first half, with the loss expanding 27.51% year-over-year. Losses attributable to shareholders reached approximately 11.947 billion yuan, increasing 21.25% compared to the same period last year.
Sales continue declining significantly, with first-half 2025 sales reaching 69.11 billion yuan—a 45.7% decrease compared to the 37.6% decline recorded in first-half 2024. The company attributes performance deterioration primarily to significantly reduced real estate project settlement scale and low gross profit margins.
In 2025, Vanke’s development business settlement area reached 5.336 million square meters with settlement revenue of 74.05 billion yuan, decreasing 39.3% and 33.7% year-over-year respectively. However, the development business settlement gross profit margin showed slight improvement at 8.1%, rising 1.3 percentage points year-over-year—the first increase after six consecutive years of decline.
Asset Impairment and Joint Venture Impacts
Beyond operational challenges, Vanke’s financial performance suffers from substantial asset impairment charges and joint venture losses. These factors further justify the move toward tighter headquarters direct management and improved risk controls.
In the first half of 2025, the company provisioned approximately 5.114 billion yuan for inventory depreciation, a significant increase of approximately 165% year-over-year. Additionally, Vanke provisioned 2.92 billion yuan for inventory depreciation in non-consolidated projects, increasing 2.75 billion yuan from the previous year.
Joint venture operations have also contributed to losses. In the first half of 2025, joint venture companies contributed an equity profit loss of 805 million yuan, resulting in an overall investment loss of 568 million yuan. This contrasts sharply with the same period in 2024 when joint ventures contributed 496 million yuan in equity profit.
Balance Sheet Pressures
Vanke’s balance sheet reflects the cumulative impact of market challenges. As of June 2025, total assets amounted to approximately 1,194.149 billion yuan, decreasing 7.16% from year-end 2024. Total liabilities reached approximately 872.988 billion yuan, reducing 7.85% from year-end 2024.
Net assets stood at approximately 321.161 billion yuan, shrinking by 17.694 billion yuan from year-end 2024—a 5.22% decrease. These figures highlight the financial context driving Vanke’s strategic shift toward headquarters direct management and operational efficiency.
Strategic Implications and Future Outlook
Vanke’s organizational restructuring toward headquarters direct management represents a strategic response to both internal needs and external market conditions. The move signals recognition that previous decentralized approaches require modification in today’s challenging property environment.
The emphasis on headquarters direct management aligns with broader industry trends as developers seek to maintain operational control while navigating complex market conditions. This approach may become increasingly common as the property sector adjustment continues.
For Vanke specifically, the success of headquarters direct management implementation will significantly influence the company’s ability to address liquidity challenges, manage debt obligations, and position for eventual market recovery. The involvement of state shareholder Shenzhen Metro provides additional resources and stability during this transition period.
Investors and market observers should monitor several key indicators following this restructuring: implementation effectiveness of headquarters direct management, progress on debt resolution, sales stabilization, and further potential support from state shareholders. These factors will collectively determine Vanke’s navigation through current market challenges.
As the property sector continues evolving, Vanke’s experience with headquarters direct management may offer valuable lessons for other developers facing similar challenges. The company’s scale and market position make its organizational changes particularly significant for the broader industry outlook.
